Supplemental Condensed Consolidating Financial Information | (11) Supplemental Condensed Consolidating Financial Information Certain of our senior notes are guaranteed by a group of subsidiaries (the “Guarantors”). The Guarantors, each of which is a 100% directly owned subsidiary of Universal Health Services, Inc., fully and unconditionally guarantee the senior notes on a joint and several basis, subject to certain customary release provisions. The following financial statements present condensed consolidating financial data for (i) Universal Health Services, Inc. (on a parent company only basis), (ii) the combined Guarantors, (iii) the combined non guarantor subsidiaries (all other subsidiaries), (iv) an elimination column for adjustments to arrive at the information for the parent company, Guarantors, and non guarantors on a consolidated basis, and (v) the parent company and our subsidiaries on a consolidated basis. Investments in subsidiaries are accounted for by the parent company and the Guarantors using the equity method for this presentation. Results of operations of subsidiaries are therefore classified in the parent company’s and Guarantors’ investment in subsidiaries accounts. The elimination entries set forth in the following condensed consolidating financial statements eliminate distributed and undistributed income of subsidiaries, investments in subsidiaries, and intercompany balances and transactions between the parent, Guarantors, and non guarantors. UNIVERSAL HEALTH SERVICES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATING STATEMENTS OF INCOME FOR THE THREE MONTHS ENDED MARCH 31, 2016 (amounts in thousands) Parent Guarantors Non Guarantors Consolidating Adjustments Total Consolidated Amounts Net revenues before provision for doubtful accounts $ 0 $ 1,812,098 $ 815,838 $ (8,343 ) $ 2,619,593 Less: Provision for doubtful accounts 0 107,680 62,115 0 169,795 Net revenues 0 1,704,418 753,723 (8,343 ) 2,449,798 Operating charges: Salaries, wages and benefits 0 824,295 323,844 0 1,148,139 Other operating expenses 0 387,677 181,980 (8,073 ) 561,584 Supplies expense 0 153,387 101,863 0 255,250 Depreciation and amortization 0 72,253 31,796 0 104,049 Lease and rental expense 0 15,294 9,428 (270 ) 24,452 0 1,452,906 648,911 (8,343 ) 2,093,474 Income from operations 0 251,512 104,812 0 356,324 Interest expense 28,300 1,136 164 0 29,600 Interest (income) expense, affiliate 0 23,054 (23,054 ) 0 0 Equity in net income of consolidated affiliates (208,227 ) (70,175 ) 0 278,402 0 Income before income taxes 179,927 297,497 127,702 (278,402 ) 326,724 Provision for income taxes (10,832 ) 97,979 23,858 0 111,005 Net income 190,759 199,518 103,844 (278,402 ) 215,719 Less: Income attributable to noncontrolling interests 0 0 24,960 0 24,960 Net income attributable to UHS $ 190,759 $ 199,518 $ 78,884 $ (278,402 ) $ 190,759 UNIVERSAL HEALTH SERVICES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATING STATEMENTS OF INCOME FOR THE THREE MONTHS ENDED MARCH 31, 2015 (amounts in thousands) Parent Guarantors Non Guarantors Consolidating Adjustments Total Consolidated Amounts Net revenues before provision for doubtful accounts $ 0 $ 1,661,612 $ 726,080 $ (7,591 ) $ 2,380,101 Less: Provision for doubtful accounts 0 106,304 48,444 0 154,748 Net revenues 0 1,555,308 677,636 (7,591 ) 2,225,353 Operating charges: Salaries, wages and benefits 0 740,554 291,149 0 1,031,703 Other operating expenses 0 351,580 161,686 (7,300 ) 505,966 Supplies expense 0 141,361 97,380 0 238,741 Depreciation and amortization 0 69,645 29,353 0 98,998 Lease and rental expense 0 13,755 9,427 (291 ) 22,891 0 1,316,895 588,995 (7,591 ) 1,898,299 Income from operations 0 238,413 88,641 0 327,054 Interest expense 28,512 1,227 298 0 30,037 Interest (income) expense, affiliate 0 23,054 (23,054 ) 0 0 Equity in net income of consolidated affiliates (191,898 ) (59,515 ) 0 251,413 0 Income before income taxes 163,386 273,647 111,397 (251,413 ) 297,017 Provision for income taxes (10,913 ) 92,130 21,477 0 102,694 Net income 174,299 181,517 89,920 (251,413 ) 194,323 Less: Income attributable to noncontrolling interests 0 0 20,024 0 20,024 Net income attributable to UHS $ 174,299 $ 181,517 $ 69,896 $ (251,413 ) $ 174,299 UNIVERSAL HEALTH SERVICES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATING STATEMENTS OF COMPREHENSIVE INCOME FOR THE THREE MONTHS ENDED MARCH 31, 2016 (amounts in thousands) Parent Guarantors Non Guarantors Consolidating Adjustments Total Consolidated Amounts Net income $ 190,759 $ 199,518 $ 103,844 $ (278,402 ) $ 215,719 Other comprehensive income (loss): Unrealized derivative gains on cash flow hedges (14,299 ) 0 0 0 (14,299 ) Amortization of terminated hedge (84 ) 0 0 0 (84 ) Foreign currency translation adjustment 5,986 5,986 0 (5,986 ) 5,986 Other comprehensive income before tax (8,397 ) 5,986 0 (5,986 ) (8,397 ) Income tax expense related to items of other comprehensive income (5,360 ) 0 0 0 (5,360 ) Total other comprehensive income, net of tax (3,037 ) 5,986 0 (5,986 ) (3,037 ) Comprehensive income 187,722 205,504 103,844 (284,388 ) 212,682 Less: Comprehensive income attributable to noncontrolling interests 0 0 24,960 0 24,960 Comprehensive income attributable to UHS $ 187,722 $ 205,504 $ 78,884 $ (284,388 ) $ 187,722 UNIVERSAL HEALTH SERVICES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATING STATEMENTS OF COMPREHENSIVE INCOME FOR THE THREE MONTHS ENDED MARCH 31, 2015 (amounts in thousands) Parent Guarantors Non Guarantors Consolidating Adjustments Total Consolidated Amounts Net income $ 174,299 $ 181,517 $ 89,920 $ (251,413 ) $ 194,323 Other comprehensive income (loss): Unrealized derivative gains on cash flow hedges 4,132 0 0 0 4,132 Amortization of terminated hedge (84 ) 0 0 0 (84 ) Currency translation adjustment (418 ) (418 ) 0 418 (418 ) Other comprehensive income before tax 3,630 (418 ) 0 418 3,630 Income tax expense related to items of other comprehensive income 1,497 0 0 0 1,497 Total other comprehensive income, net of tax 2,133 (418 ) 0 418 2,133 Comprehensive income 176,432 181,099 89,920 (250,995 ) 196,456 Less: Comprehensive income attributable to noncontrolling interests 0 0 20,024 0 20,024 Comprehensive income attributable to UHS $ 176,432 $ 181,099 $ 69,896 $ (250,995 ) $ 176,432 UNIVERSAL HEALTH SERVICES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATING BALANCE SHEET AS OF MARCH 31, 2016 (amounts in thousands) Parent Guarantors Non Guarantors Consolidating Adjustments Total Consolidated Amounts Assets Current assets: Cash and cash equivalents $ 0 $ 40,381 $ 14,209 $ 0 $ 54,590 Accounts receivable, net 0 957,504 417,233 0 1,374,737 Supplies 0 72,559 44,166 0 116,725 Other current assets 0 67,954 21,432 0 89,386 Total current assets 0 1,138,398 497,040 0 1,635,438 Investments in subsidiaries 7,974,369 1,946,590 0 (9,920,959 ) 0 Intercompany receivable 0 0 801,649 (801,649 ) 0 Intercompany note receivable 0 0 1,242,937 (1,242,937 ) 0 Property and equipment 0 4,782,483 1,872,809 0 6,655,292 Less: accumulated depreciation 0 (1,897,760 ) (876,980 ) 0 (2,774,740 ) 0 2,884,723 995,829 0 3,880,552 Other assets: Goodwill 0 3,065,409 529,492 0 3,594,901 Deferred charges 6,708 5,586 3,941 0 16,235 Other 8,180 390,548 39,155 0 437,883 $ 7,989,257 $ 9,431,254 $ 4,110,043 $ (11,965,545 ) $ 9,565,009 Liabilities and Stockholders’ Equity Current liabilities: Current maturities of long-term debt $ 485,862 $ 1,241 $ 1,159 $ 0 $ 488,262 Accounts payable and accrued liabilities 20,343 821,832 305,209 0 1,147,384 Federal and state taxes 49,794 0 0 0 49,794 Total current liabilities 555,999 823,073 306,368 0 1,685,440 Intercompany payable 186,164 615,485 0 (801,649 ) 0 Intercompany note payable 0 1,242,937 0 (1,242,937 ) 0 Other noncurrent liabilities 11,324 213,818 70,542 0 295,684 Long-term debt 2,767,605 16,468 8,071 0 2,792,144 Deferred income taxes 178,947 0 0 0 178,947 Redeemable noncontrolling interests 0 0 261,492 0 261,492 Equity: UHS common stockholders’ equity 4,289,218 6,519,473 3,401,486 (9,920,959 ) 4,289,218 Noncontrolling interest 0 0 62,084 0 62,084 Total equity 4,289,218 6,519,473 3,463,570 (9,920,959 ) 4,351,302 $ 7,989,257 $ 9,431,254 $ 4,110,043 $ (11,965,545 ) $ 9,565,009 UNIVERSAL HEALTH SERVICES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATING BALANCE SHEET AS OF DECEMBER 31, 2015 (amounts in thousands) Parent Guarantors Non Guarantors Consolidating Adjustments Total Consolidated Amounts Assets Current assets: Cash and cash equivalents $ 0 $ 47,192 $ 14,036 $ 0 $ 61,228 Accounts receivable, net 0 918,699 383,730 0 1,302,429 Supplies 0 72,499 43,538 0 116,037 Deferred income taxes 132,975 2,145 0 135,120 Other current assets 0 89,973 13,517 0 103,490 Total current assets 132,975 1,130,508 454,821 0 1,718,304 Investments in subsidiaries 7,760,156 1,876,415 0 (9,636,571 ) 0 Intercompany receivable 80,764 0 747,709 (828,473 ) 0 Intercompany note receivable 0 0 1,242,937 (1,242,937 ) 0 Property and equipment 0 4,722,050 1,808,519 0 6,530,569 Less: accumulated depreciation 0 (1,845,746 ) (848,845 ) 0 (2,694,591 ) 0 2,876,304 959,674 0 3,835,978 Other assets: Goodwill 0 3,070,061 526,053 0 3,596,114 Deferred charges 7,208 5,530 3,950 0 16,688 Other 14,251 394,998 39,111 0 448,360 $ 7,995,354 $ 9,353,816 $ 3,974,255 $ (11,707,981 ) $ 9,615,444 Liabilities and Stockholders’ Equity Current liabilities: Current maturities of long-term debt $ 60,368 $ 1,223 $ 1,131 $ 0 $ 62,722 Accounts payable and accrued liabilities 19,996 744,137 269,564 0 1,033,697 Federal and state taxes 3,987 0 0 0 3,987 Total current liabilities 84,351 745,360 270,695 0 1,100,406 Intercompany payable 0 828,473 0 (828,473 ) 0 Intercompany note payable 0 1,242,937 0 (1,242,937 ) 0 Other noncurrent liabilities 1,982 206,287 70,565 0 278,834 Long-term debt 3,343,474 16,790 8,370 0 3,368,634 Deferred income taxes 315,900 0 0 0 315,900 Redeemable noncontrolling interests 0 0 242,509 0 242,509 Equity: UHS common stockholders’ equity 4,249,647 6,313,969 3,322,602 (9,636,571 ) 4,249,647 Noncontrolling interest 0 0 59,514 0 59,514 Total equity 4,249,647 6,313,969 3,382,116 (9,636,571 ) 4,309,161 $ 7,995,354 $ 9,353,816 $ 3,974,255 $ (11,707,981 ) $ 9,615,444 UNIVERSAL HEALTH SERVICES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS FOR THE THREE MONTHS ENDED MARCH 31, 2016 (amounts in thousands) Parent Guarantors Non Guarantors Consolidating Adjustments Total Consolidated Amounts Net cash (used in) provided by operating activities $ 52,278 $ 279,625 $ 132,324 $ 0 $ 464,227 Cash Flows from Investing Activities: Property and equipment additions, net of disposals 0 (61,718 ) (65,496 ) 0 (127,214 ) Acquisition of property and businesses 0 (10,506 ) (9,037 ) 0 (19,543 ) Net cash used in investing activities 0 (72,224 ) (74,533 ) 0 (146,757 ) Cash Flows from Financing Activities: Reduction of long-term debt (166,096 ) (304 ) (271 ) 0 (166,671 ) Additional borrowings 14,400 0 0 0 14,400 Financing costs (44 ) 0 0 0 (44 ) Repurchase of common shares (171,042 ) 0 0 0 (171,042 ) Dividends paid (9,757 ) 0 0 0 (9,757 ) Issuance of common stock 2,331 0 0 0 2,331 Excess income tax benefits related to stock-based compensation 11,002 0 0 0 11,002 Profit distributions to noncontrolling interests 0 0 (3,407 ) 0 (3,407 ) Changes in intercompany balances with affiliates, net 266,928 (212,988 ) (53,940 ) 0 0 Net cash provided by (used in) financing activities (52,278 ) (213,292 ) (57,618 ) 0 (323,188 ) Effect of exchange rate changes on cash and cash equivalents 0 (920 ) 0 0 (920 ) (Decrease) increase in cash and cash equivalents 0 (6,811 ) 173 0 (6,638 ) Cash and cash equivalents, beginning of period 0 47,192 14,036 0 61,228 Cash and cash equivalents, end of period $ 0 $ 40,381 $ 14,209 $ 0 $ 54,590 UNIVERSAL HEALTH SERVICES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS FOR THE THREE MONTHS ENDED MARCH 31, 2015 (amounts in thousands) Parent Guarantors Non Guarantors Consolidating Adjustments Total Consolidated Amounts Net cash provided by operating activities $ 62,343 $ 124,046 $ 84,886 $ 0 $ 271,275 Cash Flows from Investing Activities: Property and equipment additions, net of disposals 0 (59,217 ) (30,059 ) 0 (89,276 ) Acquisition of property and businesses 0 (22,513 ) (11,987 ) 0 (34,500 ) Net cash used in investing activities 0 (81,730 ) (42,046 ) 0 (123,776 ) Cash Flows from Financing Activities: Reduction of long-term debt (156,097 ) (2,561 ) (213 ) 0 (158,871 ) Additional borrowings 20,800 0 0 0 20,800 Repurchase of common shares (28,767 ) 0 0 0 (28,767 ) Dividends paid (9,899 ) 0 0 0 (9,899 ) Issuance of common stock 1,768 0 0 0 1,768 Excess income tax benefits related to stock-based compensation 20,807 0 0 0 20,807 Profit distributions to noncontrolling interests 0 0 (2,413 ) 0 (2,413 ) Proceeds received from sale/leaseback of real property 0 0 12,551 12,551 Changes in intercompany balances with affiliates, net 89,045 (45,555 ) (43,490 ) 0 0 Net cash (used in) provided by financing activities (62,343 ) (48,116 ) (33,565 ) 0 (144,024 ) Effect of exchange rate changes on cash and cash equivalents 0 (466 ) 0 0 (466 ) Increase in cash and cash equivalents 0 (6,266 ) 9,275 0 3,009 Cash and cash equivalents, beginning of period 0 21,784 10,285 0 32,069 Cash and cash equivalents, end of period $ 0 $ 15,518 $ 19,560 $ 0 $ 35,078 |